P/E of 31 seems correct. But this is is NBFC, so don’t think we can’t value it just based on P/E
CONFERENCE CALL - from Capital Markets
Expects AUM growth at 25% in FY2017
Bajaj Finance conducted a conference call on 24 May 2016 to discuss its financial results for the quarter ended March 2016. Rajeev Jain - CEO of the company addressed the call:
- Assets Under Management (AUM) surged 36% to Rs 44229 crore at end March 2016 from Rs 32410 crore at end March 2015. The company has continued to maintained an AUM growth guidance of 25% for FY2017.
- New loans acquired galloped 39% to 68,34,762 in FY2016 from 49,24,448 in FY2015.
- Loan losses and provisions for FY16 increased 41% to Rs 543 crore as against Rs 385 crore in FY15. During the year, the Company made a provision of Rs 74.9 Crore in two accounts of Infrastructure lending portfolio. In Q4FY2016, the company has made provision of Rs 43.9 crore towards one stressed infra lending account from steel and power sector.
- Gross NPA and Net NPA as of 31 March 2016 stood at 1.23% and 0.28% respectively. The provisioning coverage ratio (PCR) stood at 77% as of 31 March 2016.
- Capital adequacy ratio (including Tier-II capital) stood at 19.50%. The tier I capital stood at 16.06%. The Company continues to be well capitalized to support its growth trajectory.
- Two Wheeler financing business disbursed 143K accounts in the quarter (24% YoY). Three Wheeler financing business disbursed 9.2K accounts in the quarter (125% YoY). Consumer Durable business had a strong quarter disbursing 9.9 lakh accounts (23% YoY).Retailer finance business disbursed Rs 1410 crore (62% YoY).
- Digital product finance business disbursed 160 K accounts (84% YoY) during the quarter. Geographic presence increased from 30 to 75 locations to diversify and realize the potential of this business.
- Lifestyle finance business disbursed 45.9k accounts (90% YoY). The company has entered Life Care finance segment, financing elective medical procedures like dental procedures, eye care surgeries etc.
- The urban gold loans business has started gaining traction. AUM has touched Rs 48 crore within 6 months of launch. The business is launched in 60 existing urban branches in phase 1.
- Salaried personal loans disbursed Rs 582 crore (21% YoY). The business has expanded presence to 55 cities with addition of 15 new locations in Q4FY16. The company is witnessing intense competition from private sector banks.
- Salaried home loans disbursed Rs 242 crore (81% YoY). The company has expanded presence from 12 locations to 19 locations.
- The company started to offer EMI financing to its EMI card customers on Flipkart platform. The number of card in force stood at 5.5 million.
- Rural lending business disbursed Rs 551 crore). The business is now present in 397 locations. The business is on track to launch branches in Tamil Nadu in Q1FY2017.
- Business loan disbursements increased 84% to Rs 891 crore, while professional loans disbursements also galloped 51% to Rs 313 crore in Q4FY2016.
- The loan against property (LAP) disbursements declined 63% to Rs 472 crore, while the self employed homes disbursements also fell 50% to Rs 245 crore in Q4FY2016.
- Loan against Share business had a good quarter with a net assets addition of Rs 307 crore.
- Corporate Finance and Financial Institutions Group (FIG) disbursed Rs 25 crore and Rs 200 crore respectively in Q4FY2016.
- Infra financing business continues to remain in pause mode due to sectoral stress, while outstanding portfolio stood at Rs 311 crore. Construction equipment finance business now has an outstanding of only Rs 55 crore and is winding down as per plan.
- Fixed deposit business garnered Rs 394 crore of new fixed deposits during the quarter taking the total deposit book to Rs 2243 crore (126% YoY). The average deposit amount stood at 3.2 lakh with a weighted tenor of greater than 27 months.
- Interest cost for the company continues to remain significantly lower amongst its NBFC peers. Borrowing mix at the quarter end stood at 48:46:06 between banks, money markets and retail deposits respectively.
Thank you Vishnu, for your prompt sharing of conference call details - as ever.
Alok, I recollect your worries on the price issue earlier too.
Rather, I would like to put a query across to you : “Where do you see the company 5 years down the line from now?”
It all depends on your conviction for the company, its future growth prospects & management quality.
I understand about the P/B. But still i look at P/E. I see that every financial site says its consolidated PE is 45 or so. They call cant be wrong. I am curious why the the PE is 45?.
FY16 EPS is Rs 242. Share price is about Rs 7300. So PE = 7300/242 = 30.
Yes. There are many factors to consider apart from PE. I wrote a post recently on analyzing NBFCs. Hope you find it useful. How to analyze NBFC companies?
Current book value is 1128 & P/B = 6.76. Assuming 25% growth in book value for next 5 years, the estimated book value would be 2850. If asset quality even deteriorates little bit or loan growth slows down, market would value Bajaj Finance at around P/B of 3 after 5 years. = 2850*4 = 11400
So if someone invest at 7200 level, the estimated returns are 9% CAGR - Assuming 25% growth and P/B valuation of 4 after 5 years.
I think risk is hight – expected returns from here might not be that great
Disc- invested from 1500 level
Interesting analysis. How did you calculate the book value to be 1128? My calculations tell me the book value is somewhere around 1400.
I took the latest balance sheet. Assuming book value = share holders equity / No. of shares, I got the book value to be 1400.
1400 book value is correct.
Dear fellow members, I’m looking for the Q1-Q4 FY15 and Q1FY16 investor presentations and conference call transcripts as these are missing on the finserv website. Would be great if any of you have may have these could pls share a link or the attachment. Thanks in advance. Varun
I have the Q4FY16 Invester Presentation (the latest one).
Please let me know if you need that.
An interview of the CEO, Mr. Rajeev Jain, on Economic Times.
The meeting of board of directors is scheduled on July 26 to consider and take on record the unaudited financial results for the quarter ended June 30. In addition to the same, the non-banking finance company today said the board may also consider sub-division of equity shares of face value of Rs 10 each and/or issue of fully-paid bonus equity shares. The proposal(s), if approved by the board, will be subject to the approval of the shareholders.
The stock price is now almost 8800 and on most of the matrices more expensive then Kotak Mahindra also, any idea what is marketing expecting from stock other than Bonus and stock split,
Just have a look at the valuation.
Current Market Capitalization 47000 Cr.
Last quarter PAT 315 Cr.,
Lets assume yearly PAT 315*4=1260 Cr.
PE =47000/1260= 37
Expected Growth in PAT 25%
Stock now looks very expensive,
Divested 60% holding
Bajaj Finance Q1 net up 54%; board approves stock split, bonus. The split is 1:5 and bonus 1:1. So, for every share, investor will get 10 shares post split & bonus.
I have missed the bus. Observing this stock since it was at 1500 levels. But due to its expensive valuation never bought it…Is there any other bus to catch …
Same case… looking at Satin Creditcare, Capital first now which look promising
Yes., Stellar Results.
It is one of my best holdings.
Attended the AGM today.
Exclusive innovation & execution by the CEO Rajeev Jain in operating the company.
It is always a treat to hear him.
It is rare to find the highest growth with the lowest NPA.
Disc : Invested.
Missed sating around 315 (wanted to enter @305) and look where it is now. Will wait patiently now for good price. This is going to be tough when prices are moving daily by 5-6% points.
My notes from the concall for Q1 2017:
Link to shareholder presentation - https://www.bajajfinserv.in/finance/downloads/IP-Q1FY17-Final.pdf Read from page 17 onwards for this quarter’s details.
- Customers acquired in Q1 has gone up by 48% yoy to 25 lakhs in the quarter
- Digital Finance segment can be as twice as big as consumer durables. The main driver in this space is mobiles. It is low ticket but high churn item.
- GNPA and NNPA was 1.47% and 0.41% respectively
- Auto sector has still not picked up significantly as yet.
- Lifestyle finance and REMI are new innovative segments of BFL
- Salaried personal loan is going direct. Expecting to move to 75% direct by end of the year.
- Expecting home loan to hit 250 cr/mon by end of year
- Ecommerce tie up with Flipkart was extremely successful. BFL got front page visibility during the sale week.
- FD is 7% currently. Can go up to 15-18%. Disintermediation in deposits side as well.
- Co is strengthening own distribution network. Is currently present in 250 cities / towns, whereas DSAs are present only in top 50.